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| Bank lending to hit six-year low, says Item Club | Bank lending to hit six-year low, says Item Club |
| (about 1 hour later) | |
| Bank lending to businesses will hit its lowest level this year since 2006, despite government efforts to stimulate lending, a report suggests. | Bank lending to businesses will hit its lowest level this year since 2006, despite government efforts to stimulate lending, a report suggests. |
| The Ernst & Young Item Club forecasts that business lending will fall by 4.6% to £429bn in 2012 from last year, the fourth consecutive annual decline. | The Ernst & Young Item Club forecasts that business lending will fall by 4.6% to £429bn in 2012 from last year, the fourth consecutive annual decline. |
| Banks say demand for loans is low, while many businesses argue banks are unwilling to lend. | Banks say demand for loans is low, while many businesses argue banks are unwilling to lend. |
| Last month, the government suggested a business bank to boost lending. | |
| "Government schemes to increase lending may help a lucky few but, as banks are encouraged by regulators to store up more capital and to look again at their forebearance policies and so-called bad-loan books, most small businesses are going to continue to feel the squeeze," said Carl Astorri, senior economic adviser to the Item club. | "Government schemes to increase lending may help a lucky few but, as banks are encouraged by regulators to store up more capital and to look again at their forebearance policies and so-called bad-loan books, most small businesses are going to continue to feel the squeeze," said Carl Astorri, senior economic adviser to the Item club. |
| He also questioned the effectiveness of the business bank, arguing that it would simply replace loans already being made. | He also questioned the effectiveness of the business bank, arguing that it would simply replace loans already being made. |
| "We expect the business bank will have to compete for projects that are commercially viable, and so we do not think the scheme will have a tangible impact on the economy," Mr Astorri said. | "We expect the business bank will have to compete for projects that are commercially viable, and so we do not think the scheme will have a tangible impact on the economy," Mr Astorri said. |
| In August, the Bank launched its Funding for Lending scheme to try to make loans cheaper. All the UK's major banks apart from HSBC signed up to the initiative. | In August, the Bank launched its Funding for Lending scheme to try to make loans cheaper. All the UK's major banks apart from HSBC signed up to the initiative. |
| This is the latest in a long line of measures the coalition and the Bank of England has introduced to try and encourage banks to lend more. | |
| Lending 'uptick' | Lending 'uptick' |
| Separate statistics from the Bank showed that lending to individuals picked up in September. | Separate statistics from the Bank showed that lending to individuals picked up in September. |
| The number of mortgages for house purchases rose to 50,024 last month, up from 47,921 in August. | The number of mortgages for house purchases rose to 50,024 last month, up from 47,921 in August. |
| The number of approvals for households remortgaging also rose, taking both levels above the monthly average of the previous six months. | The number of approvals for households remortgaging also rose, taking both levels above the monthly average of the previous six months. |
| "The uptick in lending seen in September is caused by a number of factors: increased loan availability, better rates as a result of the Funding for Lending scheme and increased confidence among buyers," said Mark Harris, chief executive of mortgage broker SPF Private Clients. | "The uptick in lending seen in September is caused by a number of factors: increased loan availability, better rates as a result of the Funding for Lending scheme and increased confidence among buyers," said Mark Harris, chief executive of mortgage broker SPF Private Clients. |
| "Some more realistic pricing from vendors keen to shift stock that has been hanging around for a while is also helping." | "Some more realistic pricing from vendors keen to shift stock that has been hanging around for a while is also helping." |